Net income decreased to -$18.9 million in the most recent quarter from $120.4 million in the same quarter last year, significantly underperforming the S&P 500 and the diversified telecommunication services industry. The 44.2 debt-to-equity ratio is very high and above the industry average, implying very poor management of debt levels within the company. The 0.7 quick ratio illustrates the company's inability to avoid short-term cash problems. Return on equity decreased greatly since the same quarter last year, a signal of major weakness within the corporation. The 26.4% gross profit margin is lower than desirable, having decreased from the same quarter last year, and the -19.4% net profit margin is significantly below the industry average. Net operating cash flow decline 3.1% to $26.4 million compared with the year-ago quarter.

We've downgraded Dominion Resources ( D), which provides electricity, natural gas and related services, from buy to hold. Strengths include the company's increase in net income, revenue growth and growth in earnings per share. However, we also find weaknesses including poor profit margins and generally poor debt management.

Net income increase by 16.5% compared with the year-ago quarter, from $303 million to $353 million. Revenue rose by 13%, trailing the industry average of 38.6% growth. Earnings per share improved by 15.4%, and we feel the company is poised for EPS growth in the coming year despite reporting somewhat volatile earnings lately. Dominion's 1.7 debt-to-equity ratio is below the industry average, suggesting that this level of debt is acceptable within the multi-utilities industry. The 0.3 quick ratio is very low, demonstrating weak liquidity. Dominion's gross profit margin of 25.5% is lower than desirable, having decreased from the same quarter the previous year. The 8.5% net profit margin, however, is above the industry average.

The company experienced a steep decline in EPS in the most recent quarter compared with the same quarter last year, and we anticipate that the company's two-year trend of declining EPS should continue in the coming year. Net income fell from $600,000 in the year-ago quarter to -$13.7 million, significantly underperforming the S&P 500 and the textiles, apparel and luxury goods industry. ROE slightly decreased, implying a minor weakness in the organization. K-Swiss' 22.3% gross profit margin is rather low, having decreased significantly from the year-ago period. The -24.4% net profit margin is significantly below the industry average.

Shares are down 50.9% over the past year, in part reflecting the overall decline in the broad market. Despite the heavy decline in its share price, however, this stock is still more expensive (when compared with its current earnings) than most other companies in its industry.

We've downgraded Lockheed Martin ( LMT), which engages principally in the research, design, development, manufacture, integration, and sustainment of advanced technology systems, products and services, from buy to hold. Strengths include the company's revenue growth, notable return on equity and increase in net income. However, we also find weaknesses including generally poor debt management, a decline in the stock price during the past year and poor profit margins.

Revenue increased by 2.7% since the year-ago quarter, helping to boost EPS. ROE greatly increased, a signal of significant strength. Lockheed's debt-to-equity ratio of 1.3 is high relative to the industry average, suggesting a need for better debt-level management, and the company's poor quick ratio of 0.7 illustrates its inability to avoid short-term cash problems.

Shares have plunged by 43.5% over the year, in part dragged down by the decline in the S&P 500. In one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

Net income fell significantly, from $567 million in the year-ago quarter to -$3.3 billion in the most recent quarter, significantly underperforming the S&P 500 and the oil, gas and consumable fuels industry. ROE also greatly decreased, a signal of major weakness. Net operating cash flow decreased to $485 million, underperforming the industry average. Valero's 10.1% gross profit margin is extremely low, though it has increased from the year-ago period. The -17.9% net profit margin significantly underperformed the industry average. Though low, the 0.4 debt-to-equity ratio is above the industry average. The 0.7 quick ratio is low, demonstrating weak liquidity.

Other ratings changes included Alliance Healthcare ( AIQ), downgraded from buy to hold, and United Bankshares ( UBSI), downgraded from buy to hold.

All ratings changes generated on March 9 are listed below.

Ticker

Company

Current

Change

Previous

AIQ

Alliance Healthcare

HOLD

Downgrade

BUY

ALSK

Alaska Communications

SELL

Downgrade

HOLD

BF.B

Brown-Forman

HOLD

Downgrade

BUY

BHLB

Berkshire Hills Bancorp

HOLD

Downgrade

BUY

CNBKA

Century Bancorp

HOLD

Downgrade

BUY

CPLA

Capella Education

HOLD

Downgrade

BUY

D

Dominion Resources

HOLD

Downgrade

BUY

FNFG

First Niagara Financial

HOLD

Downgrade

BUY

GU

Gushan Environmental Energy

SELL

Initiated

INXI

INX

SELL

Downgrade

HOLD

KSWS

K-Swiss

SELL

Downgrade

HOLD

LMT

Lockheed Martin

HOLD

Downgrade

BUY

MIGP

Mercer Insurance

HOLD

Downgrade

BUY

OPTC

Optelecom-NKF

SELL

Downgrade

HOLD

SMP

Standard Motor

SELL

Downgrade

HOLD

TCAP

Triangle Capital

SELL

Downgrade

HOLD

TDG

TransDigm Group

BUY

Upgrade

HOLD

TUC

MAC-Gray

SELL

Downgrade

HOLD

UBSI

United Bankshares

HOLD

Downgrade

BUY

UG

United-Guardian

HOLD

Downgrade

BUY

VLO

Valero Energy

SELL

Downgrade

HOLD

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